Energy Market Analysis - 03-08-2017

An expected rise in Russian flows to Europe helped to pressure down the market in the morning, but the on-going outage at Kollsnes erased losses on the near-curve as the session progressed; production capacity at the facility was down by 50mcm/ day. A rebound in oil prices also supported the far-curve but this was slightly offset by weakening coal.

A healthier wind outlook for the next couple of days helped to restrict upward movement at the front of the power curve yesterday morning but rising gas and oil supported prices in the afternoon. Weakening coal capped some of the gains at the back of the curve but failed to stop most contracts closing at a premium.

Market Open

Market Open

Norwegian output is still restricted this morning and the UK gas system is short as a result, contributing to a higher Day-Ahead contract. However, the outage is set to be resolved tomorrow unless there is another extension and stronger wind levels will further weigh on CCGT generation, limiting upward movement along the rest of the curve. Meanwhile, coal and oil markets have stabilised but low stock levels have resulted in gains on the far-curve.

The power curve is generally stable this morning but gains on the gas market mean today’s outlook remains bullish. Wind levels should stay strong for the remainder of the week but will drop over the weekend and the start of next week. Solar power is below the seasonal norm and coal plants have been brought online to help balance UK supply.

Brent 1st-nearby prices have rebounded following the release of the EIA report which showed a drop in crude stocks. However, the impact of the report is thought to be minimal as it also displayed a rise in production and lower demand, although support was also provided by a weaker Dollar.

1-year forward prices

Market close data has revealed that the 1-year forward price for both commercial gas & commercial electricity increased – closing at 42.05ppt and £43.13/MWh, respectively.

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